IMPACT – HIGH

What is the change? Employers that sponsor or nominate foreign workers for Temporary Skill Shortage (TSS) visas or for the permanent Employer Nomination Scheme (subclass 186) or Regional Sponsored Migration Scheme (subclass 187) visas from March 2018 will be required to pay into a new ‘Skilling Australians Fund’ under a proposal released Tuesday in Australia’s Federal Budget. The budget also calls for steep increases to visa application charges for certain TSS visa applicants, as Australia continues to take steps toward prioritising domestic workers over skilled migrants.

What does the change mean? Effective March 2018, affected employers will be subject to levies of A$1,200 or A$1,800 per year (or part thereof), depending on the company’s size, for every primary TSS visa applicant. Employers will also be required to make one-off levy payments of A$3,000 or A$5,000, depending on company size, for every primary subclass 186 visa or subclass 187 visa applicant. Base visa application charges (primary applicant charge) for the TSS visa programme will be set at A$1,150 for short-term (two-year) visas and at A$2,400 for medium-term (four-year) visas.

  • Implementation time frame:  The Federal Budget must be finalised and approved before the changes can take effect. The implementation of both the Skilling Australians Fund levies and the new visa application charges will coincide with the implementation of the TSS visa programme, which will replace the Temporary Work (Skilled) visa (subclass 457) in March 2018, under a plan officials announced in April this year.
  • Visas/permits affected: The visas most affected by the changes are Temporary Skill Shortage (TSS) visas, Employer Nomination Scheme (subclass 186) visas, Regional Sponsored Migration Scheme (subclass 187) visas.
  • Who is affected: Employers sponsoring or nominating foreign workers for the TSS, Employer Nomination Scheme (subclass 186), and Regional Sponsored Migration Scheme (subclass 187) visa programmes.
  • Business impact: The changes will significantly raise costs for employers that intend to sponsor or nominate foreign workers for Temporary Skill Shortage (TSS) visas or for the permanent Employer Nomination Scheme (subclass 186) and Regional Sponsored Migration Scheme (subclass 187) visas from March 2018. The abolishment of the Subclass 457 visa and introduction of the TSS visas will also have a significant impact on the ability of companies to recruit and hire foreign skilled workers from March 2018, as TSS visas are expected to impose far more restrictive application requirements.

Additional information: The release of the Federal Budget Tuesday followed Australia’s announcement in April that it would abolish the 457 temporary skilled visa programme in favour of a new TSS visa stream that will more tightly control migration and the hiring of skilled workers.

Plans for a Skilling Australians Fund date back to a 2014 review of the Subclass 457 visa programme. The fund will replace current training benchmark requirements and support skill development and apprenticeship programmes for Australian workers. The levies will apply not just to TSS visas, but also to the permanent Subclass 186 and Subclass 187 visas. Levies will be assessed as follows:

Visa Category/Subclass Levy for companies with less than A$10 million in annual turnover Levy for companies with more than A$10 million in annual turnover
Temporary Skill Shortage (TSS) visa A$1,200 per year (or part thereof) for each primary visa applicant. A$1,800 year (or part thereof) for each primary visa applicant.
Employer Nomination Scheme (subclass 186) and Regional Sponsored Migration Scheme (subclass 187) visas One-time payment of A$3,000 per primary visa applicant. One-time payment of A$5,000 per primary visa applicant.

The base visa application charges for the proposed TSS visa, meanwhile, represent a significant increase over current levels for the existing Subclass 457 visa programme. The base visa application charges will increase to A$1,150 for the Short-Term (up to two years) TSS visa stream and A$2,400 for the Medium-Term (up to four years) TSS visa stream. By contrast, the current base visa application charge for Subclass 457 visas is A$1,060 and is set to increase modestly to A$1,080 on 1 July 2017.

Visa Application Charge Increases from 1 July 2017

The Federal Budget includes moderate Visa Application Charge (VAC) increases for a number of Australian visa subclasses beginning 1 July 2017, including the following:

Subclass Subclass Name Current VAC VAC Beginning 1 July
Primary
Applicant		 Adult Depend. Child Depend. Primary
Applicant		 Adult Depend. Child Depend.
600 Visitor – ADS, Business, Sponsored A$135 N/A N/A A$140 N/A N/A
600 600 Visitor – Tourist Inside Australia A$340 N/A N/A A$345 N/A N/A
407 Training Visa A$275 A$275 A$70 A$280 A$280 A$70
400 Temporary Work (Short Stay Specialist) A$275 A$275 A$70 A$280 A$280 A$70
457 Temporary Work (Skilled) A$1,060 A$1,060 A$265 A$1,080 A$1,080 A$270
186 Employer Nomination Scheme A$3,600 A$1,800 A$900 A$3,670 A$1,835 $920
187 Regional Sponsored Migration Scheme A$3,600 A$1,800 A$900 A$3,670 A$1,835 $920
189 Skilled – Independent A$3,600 A$1,800 A$900 A$3,670 A$1,835 $920
190 Skilled – Nominated A$3,600 A$1,800 A$900 A$3,670 A$1,835 $920
408 Temporary Activity Visa – All Streams A$275 A$275 A$70 A$280 A$280 A$70
403 Temporary Work – Domestic Worker A$275 N/A N/A A$280 N/A N/A
403 Temporary Work – Foreign Government A$275 A$275 A$70 A$280 A$280 A$70
403 Temporary Work – Government Agreement A$275 A$275 A$70 A$280 A$280 A$70
403 Temporary Work – Seasonal Worker A$275 N/A N/A A$280 N/A N/A
801/100 Partner A$6,865 A$3,435 A$1,720 A$7,000 A$3,505 A$1,755
155 Five Year Resident Return A$360 N/A N/A A$365 N/A N/A

A complete list of the VAC increases is available on this Department of Immigration and Border Protection fact sheet.

BAL Analysis: The changes announced in the budget further reflect Australia’s move toward prioritising domestic workers over skilled migrants in the national workforce. The Skilling Australians Fund levies and new visa application charges will impose significant costs on businesses bringing skilled migrants to Australia. The replacement of the 457 visa programme is expected to further narrow the eligibility criteria for companies to recruit foreign skilled workers, even after Australia recently took steps to limit eligibility for 457 visas. Eligible foreign skilled workers, who are interested in applying for Australian permanent residency through the employer-sponsored Subclass 186 and Subclass 187 visa programmes, should seriously consider applying prior to the proposed March 2018 reforms, as their future Australian permanent residency options may become limited. BAL is closely following developments and will update clients as additional changes are announced.

This alert has been provided by BAL Australia. For additional information, please contact australia@bal.com

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